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Foreign investment in Aotearoa/New Zealand
Overseas Investment Office - September 2020 Decisions
Nelson Forests/OneFortyOne Gets Rubber Stamp For Forestry Land "In National Interest"
The Minister for Land Information and the Associate Minister of Finance have granted Nelson Forests Ltd (Australia 63.5%; USA 33.7%; Switzerland 1.7%; Luxembourg 1%) a standing consent under the special forestry test and national interest assessment to acquire yet-to-be-identified sensitive land. The OIO states that Nelson Forests, which is ultimately wholly owned by OneFortyOne Plantations Holdings Pty Ltd (Australia), has the largest forest estate in Nelson/Marlborough and the Kaituna Sawmill near Renwick.
It has sought the standing consent to continue growth of its trans-Tasman forestry and forest products business, carry out an ongoing acquisition programme efficiently, and obtain security of supply for the Kaituna Sawmill. Having a larger estate will enable it to increase its wood supply, allowing greater commitment to domestic suppliers. This standing consent was granted under s.23A and Sch.4(3) of the Act, with prior determination by the Minister of Finance that this was not contrary to NZ’s national interest. Nelson Forests must notify the OIO for each transaction and comply with the following:
- no more than 15,000 ha. in total, with a maximum area per transaction of:
- 2,500 ha. for land already used exclusively or nearly so for forestry activities; and
- 500 ha. for non-forest land (including farm land for conversion);
- a total of 25 transactions;
- residential land may not be acquired;
- cannot be used to acquire a strategically important business; and
- the standing consent expires on 30 September 2023.
OneFortyOne bought Nelson Forests in 2018, followed by Manuka Island forest in the Wairau Valley (see consents of August 2018 and January 2019). OneFortyOne formed in 2012 on leasing the South Australian government's forestry assets located on the 141 Meridian border with Victoria. One of the largest softwood sawmills in Australia, it also exports to China. It bought Carter Holt's sawmill and chipping operations in those states in January 2018, and additional forest in Wairau in January 2019. It partners with US company pulp and paper company Rayonier, which majority-owns Matariki Forests in NZ.
Back to TopOji Fibre Also Gets A Rubber Stamp To Buy Forests
The Minister for Land Information and the the Associate Minister of Finance have granted Oji Fibre Solutions (NZ) Ltd (Japanese Public 47.6%; Government of Japan 38.4%; USP 5.6%; UK Public 4.4%; various overseas 3.2%; Luxembourg Public 0.8%) a standing consent to acquire yet-to-be-identified land under the special forestry test and national interest assessment.
The OIO states that Oji Fibre is one of NZ's largest domestic processors of wood fibre and a major domestic manufacturer of craft pulps and packaging products. It sought the standing consent to secure future wood fibre supply for its pulp and paper operations at Kinleith Mill, Tokoroa and Tasman Mill, Kawerau, both major employers in their region.
Oji Fibre said securing long-term fibre supply will combat uncertainties in the fibre market and help ensure viability of its mills. This standing consent was granted under s. 23A and Sch. 4(3) of the Act, with approval by the Minister of Finance that it was not contrary to NZ's national interest. Oji Fibre must notify the OIO for each transaction and comply with the same conditions as the OneFortyOne consent above.
Oji Fibres already has access to a standing consent to buy NZ forests through its full ownership of Pan Pac Forest Products, which was given consent for 25 forests in September 2019. It bought Carter Holt Harvey mills in 2014. Oji bought Pan Pac in August 2007, and bought more Hawkes Bay forests in October 2018, February, March and June 2019. See consents for more forest acquisitions in the Pan Pac name in February and June 2019. There were earlier consents under a former subsidiary name Southern Plantation Forests. As at 2012 Tokyo-listed Oji Holding Corporation was the third largest company in the global forest, paper and packaging industry, with its own shipping services.
Back to TopEQT Private Equity Takeover Of Metlifecare
Asia Pacific Village Group Ltd (EQT Partners Infrastructure Fund IV, 100% overseas with no entity holding more than 5%) has consent to acquire 100% of the shares of Metlifecare Ltd, a significant business asset with sensitive land, from existing shareholders of Metlifecare (as at 30 June 2020) (NZ Superannuation Fund Nominees Ltd 19.9%; UBS Group AG 7.3%; Credit Suisse Holdings [Australia] Ltd [Credit Suisse Group AG and affiliates] 6.3%; Maso Capital Partners Ltd 5.4%; Accident Compensation Corporation 5.2%; various NZ and overseas persons 44.1%). The offer is $6 per share, totalling approximately $1.28 billion.
The OIO states that Asia Pacific Village (APV) is seeking consent to the shares in Metlifecare by a public Scheme of Arrangement. APV is indirectly owned by EQT Partners Infrastructure Fund IV, a €9 billion private equity fund managed by EQT Partners since 2008. EQT Partners have more than €62 billion in raised capital, and around €40 billion in assets under management across 19 active funds.
Metlifecare is an NZX-listed business that operates retirement villages in New Zealand and Australia, and owns land that is "residential land" or otherwise considered sensitive under the Overseas Investment Act. The OIO considers the acquisition is likely to result in benefit to NZ, as the applicant plans a greenfield development of a new retirement village and aged care facility. There is likely to be investment capital and jobs created over and above what would otherwise occur.
Metlifecare is one of New Zealand's largest retirement village operators, which listed on the NZX in 1994. A scheme of arrangement is a takeover which the target company's board and shareholders, and the court, have agreed to (ss.236A and 236B of the Companies Act). In June 2019 it was given an OIO rubber stamp for an undetermined number of retirement villages, following consents in July 2019 (Kerikeri) and April 2018 (Hobsonville). See commentary in July 2019 (under Ryman) for other reasons why NZ retirement villages are such an attractive diet for circling private equity funds.
EQT is a Stockholm-based private equity investment firm founded in 1994 by Swedish (Wallenberg family) and US private equity firms. With a network of industrial advisors, it invests in private equity, mid-market, infrastructure and credit in Nordic countries, German speaking countries, Greater China, North America (Wikipedia) - and now in NZ retirement villages. Note that, to this point, a quarter of Metlifecare's share were held by the Super Fund and ACC by New Zealanders, with another quarter held by NZ investors.
Back to TopAfterpay Gets Consent For Securitisation Programme
Afterpay NZ Ltd (Australia 49%; USA 24%; China, PR 5%; UK 3%; Norway 2%; various 17%) has OIO consent for a financing transaction from itself, involving assets which will, over time, exceed $100 million as part of a securitisation programme. The OIO states that Afterpay sought consent for financial transactions under an existing securitisation programme entered into in August 2019. Afterpay is an NZ incorporated company providing payments solutions for customers and merchants in NZ and Australia through its "Afterpay" and "Pay Now" services and businesses. The ultimate owner of both Afterpay NZ and Afterpay Holdings Pty Ltd is Afterpay Ltd, an ASX-listed entity.
Afterpay is a credit payment scheme for on-line or in-store purchases, allowing four payments at fortnightly intervals. Essentially a short-term loan. And you can currently get a 10% discount if you get your friends to use Afterpay too. This deal by Afterpay with itself won't make the loan payments themselves more secure, of course. The securitisation programme allows Afterpay to bundle up the loans, slice them thin, and trade them on as paper securities. See July 2020 (UDC/Guardian Trust) and March 2020 (Prospa) for discussion of similar "securitisation" of borrowings by New Zealanders.
Back to TopBovine Blood Serum Acquired In Danaher/GE Bioprocessing Deal
VSE Holdings Pty Ltd (US Public 65%; UK Public 5%; Canada Public 3%; Switzerland Public 3%; Germany Public 1%; Norwegian Public 1%; French Public 1%; Japanese Public 1%; various overseas 20%) has consent to acquire approximately 24.76 ha. at 433 Old Highway, Whakamarama, Tauranga, from GE Healthcare Ltd (General Electric Co., USA 100%). This is part of a larger transaction; the price for the NZ assets is approximately $4.5 million.
The OIO states that VSE Holdings is a downstream entity of Danaher Corporation, a NYX-listed global conglomerate that designs, manufactures, and markets professional, medical, industrial and commercial products and services. This acquisition is part of a global $21.3 billion deal in which the biopharma portion of GE Healthcare's Life Sciences business (now known as Cytiva) was sold to Danaher Corporation.
Currently, this land is used for a business processing bovine blood into serum for pharmaceutical, medical and veterinary research, and this will continue. Without consent, there was a risk that the business would leave NZ, with job losses. While production has been affected by the economic impacts of Covid-19, VSE expects normal production and employment levels will resume within 18 months.
A 2017 article on GE Healthcare's Website says foetal bovine serum (FBS), a meat industry by-product, is a crucial building block for vaccines and that in since 2015 an NZ company has been testing FBS for them, including identifying country of origin.
Bioprocessing involves cultivating and developing cells into a biomass which is then purified and distilled into final therapeutic products, with quality controls equivalent to pharmaceutical drugs. Investment site The Motley Fool explains that the processes involved are filtration, fluid management, fermentation, purification, and cell culture media.
Danaher was a key player in filtration and had a presence in fluid management, fermentation, and purification. This acquisition fills the gaps for Danaher and will make it the major player in bioprocessing, competing with current leader Sartorius (Alder, 29/1/020).
Back to TopWaste Management/EnviroWaste Buy Stink Buffer From Rangitikei Council
Midwest Disposals Ltd, a 50/50 joint venture between Waste Management NZ Ltd (Chinese government 45.3%; China Public 37.9%; Hong Kong Public 16.9%) and EnviroWaste Services Ltd (CK Hutchison Holdings Ltd, Hong Kong 71.9%; various 28%) has consent to acquire 0.7082 ha. at 852 Wanganui Road, Turakina, from the Rangitikei District Council (NZ 100%) for $25,000
The OIO states that, since 2000, Midwest has managed and operated the Bonny Glen Landfill between Marton and Turakina. Midwest has tendered to purchase just over 7,000 m2 on the landfill's southern boundary. The purchase requires consent because it is adjacent to the 123 ha of non-urban land that Midwest already owns for the landfill. Midwest is purchasing the land to improve the buffer between the landfill and neighbouring properties. The principal benefit is conversion of 70% of the land to native plants as an ecological buffer to disperse odours, noise, dust and other effects.
In May 2015 Midwest got resource consent to expand from a 2.7 million cubic metres storage capacity at Bonny Glen to 12.7 million cubic million metres. It takes waste from Whanganui, Palmerston North, from smaller centres in Wairarapa, Manawatū and Rangitīkei and, from August 2019, three truckloads of waste a day from Taranaki. Until November 2017, leachate from the landfill was treated and discharged into Tūtaenui (sic!) stream.
A full treatment system was installed and, since August 2018, the treated leachate goes into Whanganui's wastewater treatment plant (NZ Herald 22/3/19). Midwest Disposals also operates the Levin landfill, which takes Kāpiti and Horowhenua waste, has long been leaching into the Hokio stream and is now due for closure.
See April 2018 for Waste Management's consent for a Tamaki operations centre, background on the company and links to articles on waste management in NZ. See September 2019 for EnviroWaste consent for a cleanfill and recycling centre at Pōkeno. EnviroWaste's owner CK Hutchison Holdings is a Hong Kong-based and Cayman Islands-registered transnational conglomerate, a 2015 restructuring of the Cheung Kong Group. Its chief advisor and former chair is plastics and real estate magnate Li Ka-shing, currently 30th richest person in the world.
Back to TopFletcher Residential To Build Urban Village In Kumeu
The Minister for Land Information and the Associate Minister of Finance have granted consent to Fletcher Residential Ltd (NZ Public 52.31%; Australian Public 47.3%; various overseas persons 0.35%) to acquire 46.7689 ha. at 467 Waitakere Road and 61.8764 ha. at 517-529 Waitakere Road at Taupaki, near Kumeu, North Auckland, from SB Cashin Ltd (NZ 100%) and WH & LW Kay Ltd (NZ 100%). Price withheld.
The OIO states that Fletcher Residential develops residential land and builds new dwellings. It proposes to acquire this land and pursue a rezoning for urban use, given the fast-growing Auckland population and the attractive features of the location. It will subdivide to construct an urban village, together with roads, parks and supporting infrastructure, which it expects to be completed by 2045. Subject to rezoning and resource consents, this is likely to result in up to 87 new dwellings.
The bed of the Kumeu River on the land will be sold to the Crown and cycle and walking paths created along the riverbank. Fletchers has agreed to conditions to protect and enhance native wildlife in the Kumeu River. Fletchers has a previous history of investments that have benefitted NZ, and its NZX listing means that New Zealanders will participate in the investment. Fletcher Residential was given a 20-site OIO rubber stamp in April 2019, but the consent summary does not mention this acquisition as one of the 20.
Back to TopOyster Fund Acquires Millennium Centre From Goodman
Millennium Centre Trustees Ltd (NZ 50.1%; Singapore 22.4%; Australia 12.4%; USA 4.4%; UK 1.1%; Europe 1.1%; various overseas 8.5%) has consent to acquire significant business assets and 3.0433 ha. of non-sensitive land at 600-604 Great South Road, near Drury, Auckland, from Goodman Nominee (NZ) Ltd (NZ Public 67.4%; Australian Public 25.6%; North American Public 5.5%; Asian Public 0.8%; European Public 0.7%) for $210,023,756. The OIO states that Millennium Centre Trustees Ltd is part of the Oyster Property Group, an NZ commercial property and funds manager. This property was acquired as part of a syndicated proportionate property ownership programme.
The Millennium Centre, at this address, is an upmarket three ha. property with offices and other facilities in Greenlane which Oyster purchased in 2016 for about $210 million, before offering it to wholesale investors as a single-asset unlisted property fund. Offices were available for lease from July 2019. See May 2018 for an OIO consent related to 666 Great South Rd for a differently named affiliate of Oyster Group, in partnership with an affiliate of KKR global asset managers.
Oyster Property Group describes itself as an NZ commercial property and fund manager with expertise in property fund structuring and equity raising. It manages a range of retail, office and industrial assets throughout NZ, with a combined value of over $1.9 billion. It has over 20 property funds for retail and wholesale investors, and partners with institutional capital and private equity.
Oyster is 50% owned by Cromwell Property Group, which is an ASX-listed (S&P/ASX 200) real estate investor and manager with operations on three continents and a global investor base. As at 30 June 2020, Cromwell had a market capitalisation of $A2.4 billion, a direct property investment portfolio in Australia valued at $A3 billion and total assets under management of $A11.5 billion across Australia, NZ and Europe.
Back to TopRetrospective Consent For Chinese Owners Of Matakana Vineyards
Jieyu Lu and Hongzhao Huang (China PR 100%) have consent to acquire non-urban land being approximately 5.0110 ha. at 570 Matakana Road, 7.7880 ha. at 568 Matakana Road, and 12.2087 ha. at 494 Matakana Road, all RD 5 Warkworth, from Vegar Estate Wines Ltd (in receivership and liquidation), VP 568 Ltd (in receivership) and Patricia Anne Vegar-Fitzgerald (NZ 100%) for $7.1 million.
The OIO states that the applicants are Chinese entrepreneurs and business owners. They are receiving retrospective consent for their current and future interests in the land. The land is the Matakana Estate, in which they have been involved since 2012. They initially focused on Matakana Estate's wine business, but are now working on diversifying the business into functions, accommodation and tourism.
The acquisition has already led to, and will likely continue to lead to, additional investment, jobs, oversight and participation by New Zealanders, increased export receipts, increased processing of primary products, advancing the Government's tourism strategy, enhancing the viability of the Matakana Estate wine business, and improved public walking access. The OIO noted Jieyu Lu is no longer an overseas person, being ordinarily resident in NZ since December 2017, which was considered under the oversight and participation by New Zealanders' benefit factor.
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